Profits of professional services firms guildlines suspended
In 2015 the ATO published some guidelines ‘Assessing the risk: allocation of profits within professional firms’ which aimed at ensuring that profits derived from professional services firms were taxed in an appropriate manner. In broad terms, the ATO set out some safe harbour approaches that could be used to ensure that practitioners were classified as low risk from a Part IVA point of view.
On 14 December 2017 following a promised review , The ATO suspended the application of its risk assessment guidelines for allocation of profits within professional firms and have advised anybody wanting to enter into a new arrangement not to rely on these previous rules.
The review indicated that the guidelines were being misinterpreted in relation to the arrangements that go beyond the scope of the guidelines.
If you are a professional practitioner contemplating entering into a new arrangement or you are concerned about your current structure please contact our office and we can provide you with more information.